Sunday, January 11, 2015

On Teacher Pensions and US Foreign Policy: A Guest Post by Brian Crowell

After scanning the Cal STRs and the Connecticut Teachers Retirement System two countries stood out in the pension portfolio list. Those names being Russia and Venezuela. As you may or may not know Russia and Venezuela are under economic sanctions. These countries have been ravaged by United States Sanctions and the dramatic drop in oil prices. Although consumers have benefited of the savings in gas prices, there is also I argue unintended consequences of economic sanctions on Russia and Venezuela. (Please see footnotes below)

As you can see Cal Strs has invested roughly 4.2 million in the Russian Federation, with a nice 7.5% return on investment. (See below; numbers are in thousands 3 zeros)

RUSSIAN FEDERATION

3,607

7.500

3/31/2030

4,177

RUSSIAN FEDERATION

651

7.500

3/31/2030

754

The bonds run through year 2030. If Russia defaults that would be a loss in the pension portfolio for teachers. Lets take a look at Venezuela for the sake of inquiry. Again an impressive return on investment. These countries encompass a small percentage of the portfolio but the overall yield is in line with the Cal STRS mandate of return on investment. 9.375% on the high end and 5.75% on the low end.

REPUBLIC OF VENEZUELA

169

9.375

1/13/2034

142

REPUBLIC OF VENEZUELA

36

8.500

10/8/2014

36

REPUBLIC OF VENEZUELA

2,329

5.750

2/26/2016

2,207

The Connecticut Pension Fund has similar investment albeit smaller but the trend lines are the same. The whose who on the list of the Cal STRS pension fund fixed income assets include, Goldman Sachs, Lockheed Martin, Monsanto, MGM Grand, Bank of America and the now defunct Bear Stearns Investment Bank. Several questions come to mind when seeing the direct connections between teachers, wall st. and foreign policy.

1. Whose interest is served if the economics of Russia and Venezuela suffer?

4. How can teachers have more of a say who our Pension Managers do business with? After all its our money that we pay into every month. Monsanto and Wall Mart don’t have many fans in teachers on the left center of the political spectrum. Questions like these will have to be addressed in 2015 as we go deeper into an interconnected multipolar world.

5. Is the interconnectedness with wall st. risky assets the reason the unions are so captured by corporate education reform?